4Q26 Revenue: $1.32B, +45.1% YoY, beat estimates by $40M
4Q26 Non-GAAP EPS: $4.10, beat estimates by $0.29
1Q27 Guidance: 1Q27 revenue guided to $1.375B–$1.425B, implying roughly 43% YoY growth at the midpoint and comfortably above roughly $1.32B consensus. Non-GAAP EPS guidance of $4.10–$4.25 was also above expectations.
Comment: This was an exceptionally strong beat-and-raise. Data-center revenue surged 68% YoY to $669M and reached 51% of total revenue, driven by DCI, high-performance computing and transceiver demand. More importantly, the strong 1QFY27 guide indicates that AI optical demand is still accelerating rather than peaking after FY26’s 36% revenue growth. The main debate has shifted from demand to capacity and valuation. Fabrinet is expanding manufacturing in Thailand and Silicon Valley, with planned infrastructure capable of supporting roughly $12.5B–$14B of annual revenue versus a Q4 exit run-rate near $5.3B. However, inventory has risen above $1B, Q4 free cash flow was negative, and customer forecasts are not firm orders. Despite beating both revenue and EPS and issuing guidance well above consensus, shares fell roughly 5%–6% after hours. This is the clearest warning: expectations and valuation are extremely elevated, so even substantial beats are no longer sufficient to drive upside. The principal variables are 800G/1.6T optical ramps, hyperscaler transceiver wins, DCI growth, capacity expansion and component availability. 3Q26 recommended trading range: $525 to $650. Neutral Outlook.
